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Commitment of Traders (COT) Report Shows Increase in Net Euro Shorts

Last week’s Commitment of Traders (COT) report showed a marked increase in the volumeof Euro short positions, while the volume of USD longs is relatively unchanged.

According to the CFTC’s Positioning report, net Euro short positions have risen, which is not a surprise as the expected ECB stimulus package has dampened outlook on the Euro. Similarly, the net volume of short positions on the British Pound has fallen for the 4th straight week, as fears of a no-deal Brexit have started to wane.

Net long positions on the US Dollar have not changed much, as markets are pricing in a 25bp rate cut when the US Fed meets next week. The report has also noted a drop in net long positions on the CAD for the 4th week in a row, as markets are expecting a dovish turn by the Bank of Canada soon. Improving risk appetite has caused trades to scale back on the net long positions in the JPY, even though the positions are still in buying territory.

Improved risk appetite following a period of heavy risk-off sentiment has led to a slight increase in net CHF short positions. Finally, the COT report also noted that there was a slight drop in AUD net shorts. However, the expectation of a dovish RBA continues to drive short positions on the Aussie Dollar.